Bubb’s presentation took aim at a widely held belief about one of the causes of the recent financial crisis: that securitization led to lax underwriting standards—and thus massive numbers of mortgage defaults—because it allowed housing lenders to move high-risk loans off their books. In a paper he co-authored with economist Alex Kaufman—the basis of his speech at the conference—Ryan contended that the jury is still out on this question. Titled “Securitization and Moral Hazard, Evidence from a Lender Cutoff Rule,” the paper notes that the most influential evidence to date for the conventional view that blames securitization rests on an assumption about lender behavior connected to credit scores. But the paper, drawing on extensive empirical analysis, presents an alternative theory for that behavior. It concludes that the role of securitization in weakening mortgage underwriting is unestablished.

Anyone without significant economic training would find the details of Bubb’s analysis hard to decipher. But the implications are relatively simple: Much of post-financial crisis regulatory policy, Bubb notes, is based on the accepted wisdom that the mortgage-bond market facilitated the issuance of millions of bad-bet loans. In fact, he says, “more research needs to be done so that public policy on securitization is based on sound evidence.”